Online Accounting Software

Accounting is a process that requires attention to detail, accuracy, and discipline. At [company name], we help our clients streamline their accounting processes so they can get back to what matters: growing their business.

Our cloud-based accounting software gives you the power to organize your finances, manage payrolls, and analyze your data so you can make informed decisions about your company’s future. We’re proud of our reputation for being simple to use while still offering all the features an accountant needs—and then some!

Whether you’re just starting out or looking to upgrade your existing system, we have something for you.

Online Accounting Software

Small business owners benefit from accounting software because it helps them track accounts receivable and accounts payable, have a clear understanding of their profitability, and be prepared for tax season. In the world of accounting software, a small business is one that can use out-of-the-box software without requiring extensive customizations. As a business grows, its accounting needs become more complex, and a custom enterprise resource planning (ERP) system is often needed.

There are many different types of accounting software available for small businesses, with varying capabilities and price tags. Generally, the type of industry and number of employees are two factors that can help a small business owner begin to choose the accounting software that is appropriate. For example, a freelancer would not need the same features in accounting software as a restaurant owner.

Nineteen accounting software companies were researched and compared before selecting our top five best suited for small businesses. When evaluating companies, we considered cost, ease of use, features, integrations, and scalability.

The 5 Best Accounting Software for Small Business of 2022

•  Best Overall: QuickBooks Online
•  Best for Micro-Business Owners: Xero
•  Best for Service-Based Businesses: FreshBooks
•  Best for Part-Time Freelancers: QuickBooks Self-Employed
•  Best Free Software: Wave

Best Accounting Software For Small Business

• QuickBooks Online
• Xero
• FreshBooks
• QuickBooks Self-Employed
• Wave
• What Does Accounting Software For A Small Business Do?
• How Does Accounting Software Work?
• How Much Does Accounting Software For Small Business Cost?
• Methodology

BEST OVERALLQuickBooks Online

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QuickBooks Online is the best overall accounting software for small businesses of those reviewed. Not only do the majority of small business accounting professionals use QuickBooks Online, but there are also endless online training resources and forums to get support when needed. All accounting features can be conveniently accessed on one main dashboard, making bookkeeping more fluid and efficient.Pros

• Scalable
• Commonly used by accounting professionals
• Integration with third-party applications
• Cloud-based
• Mobile app

Cons

• Upgrade required for more users
• Occasional syncing problems with banks and credit cards

Intuit’s QuickBooks Online has been one of the most common accounting softwares used by small businesses and their bookkeeping and tax professionals. The software is cloud-based and can be accessed through a web browser or through the mobile app.

After the 30-day free trial, the four options for subscription plans include: Simple Start at $25 per month, Essentials at $50 per month, Plus at $80 per month, and Advanced at $180 per month. Typically there is a significant discount offered for the first few months, and some accountants are able to offer wholesale pricing to small businesses, as well. 

The monthly subscription for this software can be upgraded as a business grows, and there are many customization options with the mobile app that can be used to receive payments, review reports, capture an image of a receipt, and track business mileage. For businesses looking for a payroll solution, QuickBooks Payroll fully integrates with QuickBooks Online.

Each plan offers more advanced features like inventory management, time tracking, additional users, and budgeting. Most service-based small businesses will find that Simple Start meets all of their needs. For product-based small businesses, Essentials or Plus will have more options for inventory and customizations. The Advanced subscription is a new offering and provides robust financial reporting that is powered by Fathom. Fathom is an elite online financial report analysis tool used by many large companies all over the world.

All plans allow integration with third-party apps such as Stripe or PayPal. QuickBooks Online’s app store breaks down all of their apps by function and provides helpful examples of the benefits of each app.

BEST FOR MICRO-BUSINESS OWNERSXero

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Xero is the best in our review for micro-businesses that are looking for very simple accounting software. This software has a clean interface and also fully integrates with a third-party payroll service. Businesses can collect payment online from customers through Xero’s integration with Stripe and GoCardless.Pros

• Cloud-based
• Mobile app
• Payroll integration with Gusto
• Third-party app marketplace
• Simple inventory management

Cons

• Limited reporting
• Fees charged for ACH payments
• Limited customer service

Xero was founded in 2006 in New Zealand and now has over 3 million subscribers worldwide. This accounting software is popular in New Zealand, Australia, and the United Kingdom. Xero has over 4,000 employees and is growing rapidly in the U.S., as well.

Xero offers three monthly subscription options and a full-service payroll add-on: Early at $12 per month, Growing at $34 per month, and Established at $65 per month. The full-service payroll option is offered through Gusto and is an additional $39 per month, plus $6 per employee. The company offers a 30-day free trial. 

The Early plan limits usage and only allows entry for 20 invoices or quotes and five bills per month. This limited plan may be suitable for a micro-business with high-ticket transactions, but only a few per month, such as a consulting or small service provider. Both the Growing and Established plans offer unlimited invoices and bills. The only difference between the two is that the Established plan has additional features like multi-currency, expense management, and project costing. All three plans offer Hubdoc, a bill and receipt capture solution.

BEST FOR SERVICE-BASED BUSINESSESFreshBooks

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The most crucial accounting need for most service-based businesses is invoicing. FreshBooks offers more customizations for invoicing compared to other accounting software. Its primary function is to send, receive, print, and pay invoices, but it can also take care of a business’ basic bookkeeping needs as well. This accounting software makes it easier for service-based businesses to send proposals and , track time on projects, and receive payments.Pros

• Cloud-based
• User-friendly interface
• Third-party app integration
• Affordable
• Advanced invoicing features

Cons

• No payroll service
• Mobile app has limitations

Founded in 2003 in Toronto, FreshBooks started as just an invoicing software. Over time, more features have been added and FreshBooks now has over 500 employees. There are four different plans, and businesses can get a 10% discount if they choose to pay yearly, rather than monthly. Additionally, FreshBooks offers a 60% off discount per month for six months. The four plans are: Lite at $6 per month, Plus at $10 per month, Premium at $20 per month, and Select, which is a custom service with custom pricing.

The main difference between the four plans is the number of different clients that are allowed to be billed per month. In the Lite plan, up to five clients can be billed per month. In the Plus plan, up to 50 clients can be billed per month. In the Premium plan, unlimited clients can be billed per month. The Select plan also does not have a limitation on the number of clients that can be billed per month, but adds unique features. It costs an additional $10 per month for multiple team members to use the accounting software and it costs an additional $20 per month for the advanced payment feature, which allows users to charge a credit card in real-time or set up a recurring credit card charge for a client.

There are many third-party app integrations available, such as Shopify, Gusto, Stripe, G Suite, and more. A unique feature of FreshBooks is that invoices can be highly stylized and customized for a professional look and feel. FreshBooks is a great tool for budgeting out projects, sending estimates or proposals, and collecting customer payments.

BEST FOR PART-TIME FREELANCERSQuickBooks Self-Employed

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QuickBooks Self-Employed accounting software is our top choice for part-time freelancers and independent contractors who primarily want to track their income and expenses for their tax return. This software is designed for business owners who file a Schedule C on their individual tax return. 

Without keeping up with business activity using a software like this, freelancers would need to dig through all of their bank and credit card statements to add up their income and expenses at the end of each year, which can be quite daunting. QuickBooks Self-Employed will total up all business transactions automatically.Pros

• Cloud-based
• Mobile app
• Track mileage
• Differentiate between business and personal expenses
• Syncs with TurboTax

Cons

• Data cannot be easily transferred to other accounting software
• Limited reporting
• Limited invoicing functionality and customization

QuickBooks Self-Employed is an Intuit product with a cloud-based online interface and a mobile app. This software was created to help freelancers stay organized each year for tax season. Features of QuickBooks Self-Employed include tracking mileage, sorting expenses, organizing receipts, sending invoices, and estimating and filing taxes seamlessly through TurboTax.

Users can choose between three plan options: Self-Employed at $15 per month, Self-Employed Tax Bundle at $25 per month, and Self-Employed Live Tax Bundle at $35 per month. There is a 50% discount for the first three months. The two tax bundles include a TurboTax subscription for income tax filing. The Self-Employed Live Tax Bundle also gives you access to a CPA to answer questions throughout the year and during tax season. The CPA will also perform a final review of your tax return in TurboTax prior to filing. 

The mobile app makes it easy to track mileage while driving and capture photos of receipts for business expenses. Most accounting software is not designed to separate business transactions from personal transactions, but a special feature of QuickBooks Self-Employed provides an option to mark each transaction as business or personal. This is helpful for freelancers who don’t have a separate bank account for their business activity.

BEST FREE SOFTWAREWave

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Wave is an ideal accounting software platform for a service-based small business that sends simple invoices and doesn’t need to run payroll. For many freelancers or service-based businesses, Wave’s free features will cover all of their accounting needs and is the best free software in our review. At year-end, accountants can pull the necessary reports from Wave to prepare a business’ tax return.Pros

• Free accounting, invoicing, and receipt scanning
• No transaction or billing limits
• Run multiple businesses in one account
• Unlimited number of users
• Mobile app

Cons

• Limited third-party app integrations
• Higher fees for credit cards and ACH payments
• Full-service payroll is limited to only 14 states

Wave was founded in 2010 and is based in Toronto. The company has over 250 employees and was purchased by H&R Block in 2019. The foundational accounting features that most small businesses need, such as income and expense tracking, financial reporting, invoicing, and scanning receipts, are all included with this free software. These features can be accessed online or on the mobile app. Customer payment processing and payroll are considered premium services that cost extra, but all of the bookkeeping, invoicing, and reporting features are completely free.

Wave makes its money on its payment gateway. To process payment from a customer, Wave charges 2.9% plus 30¢ per transaction for Visa, Mastercard, and Discover, and 3.4% plus 30¢ per transaction for American Express. These fees are slightly higher than other accounting software. Additionally, to process an ACH payment, rather than a credit card, Wave charges 1% per transaction with a $1 minimum fee. This is unique to Wave, as the majority of accounting software does not charge a fee for ACH payment processing. 

Wave offers two payroll plans as an add-on service. The first plan is $20 per month plus $6 per employee or contractor. In this plan, Wave will process payroll and prepare payroll tax calculations, but the user is responsible for manually completing payroll tax forms and submitting tax payments. The second plan is $35 per month plus $6 per employee or contractor. In this plan, payroll is full-service, which means that all tax filings and payments are completely managed by Wave. This full-service payroll option is only available in 14 states.

What Does Accounting Software for a Small Business Do?

Accounting software reduces the amount of time spent on data entry by allowing users to sync their business bank accounts and credit cards with the software. Once synced, transactions will flow into the accounting software, where they can be categorized into various accounts. While most accounting software is easy to use, a general understanding of accounting principles is needed to ensure that financial reports are prepared correctly. For this reason, many businesses hire bookkeepers or accountants to maintain or review their books. Cloud-based online accounting software makes it convenient for businesses to access their books at the same time as their bookkeeper or accountant.

The most basic functions of accounting software for small businesses are:

• Invoicing
• Bank and credit card syncing
• Accounts payable
• Accounts receivable
• Online payment collection from customers
• Basic financial statement preparation, such as profit and loss statements, balance sheets, and statements of cash flow
• User access for accountants or tax professionals.

How Does Accounting Software Work?

Once a business’ bank accounts and credit cards are synced with the accounting software, transactions will appear in a queue and can be classified into the categories found on the business’ chart of accounts. After selecting the proper category, transactions begin to populate the business’ financial statements. Business owners can run a financial report in seconds to review profitability, compare revenue and costs, check bank and loan balances, and predict tax liabilities. Having quick access to this financial information gives business owners the power to make important decisions.

Additionally, many accounting software allows third-party application integrations. For example, if a business owner uses a point of sale (POS) system to capture sales transactions, the POS system could potentially integrate with the accounting software to record specific transactions, sales tax liabilities, sales by subcategories, and more. In a service-based business, a time tracking application could integrate with the accounting software to add labor to a client invoice.

How Much Does Accounting Software for Small Business Cost?

Small business accounting software ranges from $0 to $150 per month. Basic plans are in the $0 to $40 per month range and are a great place to start. With a basic plan, a small business will be able to categorize income and expenses, send invoices, and prepare financial reports. As a business grows, most software is scalable, and the plan can be easily upgraded to meet new business needs. The more robust plans allow businesses to track inventory, prepare more customized financial reports, run payroll, and choose from more invoicing options.

How We Chose Accounting Software for Small Business

We looked at nineteen accounting software companies with specialized products for small businesses before choosing our top five software options. We considered cost, scalability, ease of use, reputation, and accounting features. Reputation was a key consideration because the longer a company has been around, the more likely that any technological glitches have been resolved, which ensures that a company’s important financial information will be reported accurately. Scalability was the next most important consideration because as a company grows, its accounting needs grow as well, and transferring financial information to new software can be tedious. Finally, ease of use and collaboration for business owners, employees, and accountants was considered because it’s important for all users to be able to access and review the financials at the same time.

small business accounting software free

Free accounting software is automated cloud or desktop technology that allows business owners and financial professionals to manage a small business’s books for free through their computer.

Of course, even the best free software won’t be your most powerful accounting software options. If you want to access state-of-the-art accounting innovations for your small business, you’ll have to pay for it.

That said, exploring the best software options for small business will give you an idea of whether or not you want to be paying for this financial resource.

The 8 Best Free Accounting Software for Small Business

Free accounting software might seem like a myth—in fact, many business accounting software options that say they’re free end up charging you in some form or fashion, whether they require you to upgrade for some crucial feature or require that you pay for installation.

While searching for free software for your small business, be sure to know exactly what costs each option could potentially entail. We’ve compiled some of the best accounting software options that are actually free. Of course, most of these options will include versions and add-ons that will cost you, but their most basic versions are completely free:

1. Wave

A top free accounting software to consider from the start of your search is Wave accounting software. Through this option, you’ll be able to connect unlimited bank and credit card accounts to your books. You’ll also be able to add unlimited income tracking, expense tracking, and guest collaborators for free. Plus, you’ll be able to invoice and scan receipts for free as well.

Be sure to note, though: If you want your invoiced customers to be able to pay online directly through the invoice, you’ll need to pay for that. Wave charges 2.9% + $0.30 for each credit card payment and 1% (with a minimum of $1) for each ACH payment. You’ll also need to pay for payroll through Wave. Depending on where you do business, you’ll pay a monthly base fee of either $35 or $20, plus $4 per employee and contractor on your payroll.

2. ZipBooks

Another top free accounting software for small businesses to consider is ZipBooks. ZipBooks offers all the crucial features of an accounting software—reports, bank syncing, billing, expense management, and invoicing—in one free account.

If you want to offer online payments to your invoiced customers via ZipBooks, you’ll need to do so via Square or PayPal. You’ll pay the standard PayPal rates and Square rates for those transactions.

ZipBooks offers an integrated payroll add-on option with Gusto. Gusto starts at $39 per month, plus $6 per person per month. For a limited time, you can get the Core plan for a discounted price of a monthly $19 base cost for the first six months. Gusto also has a new option for contractor-only employers, who simply pay the $6 per employee rate and no base price.

3. Akaunting

You should also consider a free accounting software called Aaunting. This option offers many of the most necessary features that a small business accounting software should. Within this technology, you’ll be able to invoice, sync accounts, track expenses, set up recurring bills, manage customers, and manage vendors. However, to access more advanced features like online payments, for example, you’ll have to download third-party apps that will cost you a yearly fee on top of whatever fees you have to pay for this third-party account.

Long story short, creating an Akaunting account won’t cost you anything, but as you navigate this software, you’ll realize that all the capabilities that you might expect to be ready-to-use will rely on your purchasing these third-party apps.

4. SlickPie

The free accounting software SlickPie is also worth looking into for your small business finances. The free version of this accounting software allows for unlimited automated receipt entries, 10 different companies on one account, and email support. It also allows you to create quotes and estimates that can easily become professional invoices. SlickPie also allows you to connect your PayPal and Stripe accounts for free. That means customers will be able to fulfill their invoices with card or PayPal payments online—and you’ll simply have to pay the standard transaction fees that PayPal and Stripe charge.

One feature that this free accounting software seems to be lacking is reports—the SlickPie website doesn’t highlight any built-in reporting capabilities. If you’re hoping to extract valuable, high-level insights from your accounting software, then you might want to consider options other than SlickPie.

5. GnuCash

If you’re looking for a free desktop accounting software for your small business, then GnuCash is a solid contender. To access this free accounting software option, all you have to do is go to the GnuCash site and download it for free—simple as that. Though GnuCash doubles as a personal and small business accounting software, it offers small business-specific features customer and vendor tracking, job costing, and invoicing.

6. CloudBooks

With the free version of CloudBooks accounting software, you’ll be able to add unlimited users, invoice, create projects, perform integrated time tracking, track expenses, and provide estimates. That said, you’ll have to upgrade from the free version—and pay at least $10 a month—to be able to send more than five invoices per month, brand your invoices, and offer online payments on your invoices.

7. Zoho Invoice

If you’re looking for the best free accounting software to automate your invoicing workflows, then Zoho Invoice will be a top option. With the free version of Zoho Invoice, you’ll be able to invoice customers and manage payments through a single account. You’ll also be able to customize and brand invoice templates, track expenses, and interact with customers through a client portal. Not to mention, you can run integrated time tracking for yourself and employees for project billing.Sign Up for Zoho Invoice for Free

8. NCH Express Accounts

Another free desktop accounting software option to consider is NCH Express Accounts. The free version of this accounting software can support the accounting needs of small businesses with fewer than five employees. Through this free accounting software for small businesses, you’ll be able to access and generate 20 crucial financial reports and analyze revenues by customer, team member, or item. You’ll also be able to manage accounts receivable and payable easily through this software. That said, in order to access your books online, you’ll have to purchase the cloud version of Express Accounts, which isn’t free and currently starts at $59.95.See Top Accounting Software Options

Free Accounting Software: What You Might Miss out On

Free accounting software is great—avoiding a monthly cost can seriously whittle down your business’s bottom line. And especially when you’re just starting up, $0 a month can be a non-negotiable budget for accounting software.

However if you opt for a free accounting software for your small business, you’ll likely be missing out on a few things that other accounting software options offer. And, in some cases, the features that free software doesn’t offer could end up saving your business money. All in, more powerful accounting software often ends up paying for itself, so be careful to weigh the potential costs that you could incur—be it bookkeeping backup or tax fines—from using free accounting software. Check out these features that free software options typically leave out, and see if it’s time to make room in your budget for a more powerful technology:

1. Payroll and Tax Capabilities

Many accounting software options that cost a monthly fee will offer tax support for your business. They also often offer full payroll services that allow you to integrate your payroll seamlessly into your business’s books.

2. Sophisticated Reports

Though many free accounting software options will offer small businesses entry-level reports, other accounting software options typically open up even more sophisticated reporting options. Whether this includes data visualizations, more customizable numbers, or all of the above, reporting through accounting software that isn’t free usually allows users to get at more valuable insights.

3. Forecasting

Forecasting usually isn’t a feature that free accounting software options provide. If you want to be able to project financial numbers to more effectively set goals and budget, then you might want to consider upgrading.

4. Inventory and Order Tracking

Most free accounting software options won’t offer inventory or order tracking, either. If you’re looking for accounting software for a small retail business, then this feature will be crucial.

5. User and Invoicing Count

Perhaps most importantly, free accounting software will almost always limit the activity you can perform through it. Most free software options will cap your users at five per account. Even more, some will cap the number of customers you can invoice and the amount of invoice you can send per month. If your small business typically exceeds these caps, then an upgrade is a must. Otherwise, a free accounting software that doesn’t meet your needs simply isn’t worth the time.

Free Accounting Software Alternatives: Accounting Software Free Trials

After reading through this guide to free accounting software, it’s easy to be on the fence. On the one hand, you want the best for your business, and accessing the best accounting software possible could very well be worth it. On the other hand, pretty much nothing beats free, especially when you’re so keenly focused on your business’s finances.

Luckily, a happy middle ground exists: Many of the most powerful accounting software options offer a 30-day free trial to new customers. In fact, FreshBooks, Sage, Xero, and QuickBooks all offer free trials on each of their accounting software options. With a free trial, you’ll be able to try out the more expensive options and see if they provide enough value to justify their costs. You might find that, as you use the free trial, the added features aren’t useful for you, and a free accounting software option works perfectly fine. Or, you might find that the reports, tax assistance, and payroll that more expensive accounting options offer will save you enough time and money to justify their monthly fees.

Whichever way you fall, trying out a free trial will help you perform a quick cost-benefit analysis of your options. And, as such, when you make your decision, you can be confident you’re making the right one.See Top Accounting Software Options

The Bottom Line

Now that you’ve combed through your top nine free accounting software options—and learned about alternate routes—what’s next?

Well, your next steps will depend on which option you’ve decided to move forward with. If you’re set on sticking with a free accounting software for your small business, it’s time to start trying them out. Luckily, you can pick a few and see which works best through trying them out—without incurring any costs.

If you’re interested in testing out some accounting software options that aren’t free, we suggest you read reviews of the free-trial options we listed above. Pick the best fit for your business, and try it out in tandem with a free option. See how the two compare, and move forward with whichever provides the most net value for your business.

Conclusion

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